Japan

Apr 25, 2006

Oil industry in downturn

TOKYO - The oil industry likely suffered the first downturn in gasoline sales in 21 years for fiscal 2005 on such factors as surging prices and more fuel-efficient cars, The Nihon Keizai Shimbun has learned.

Oil wholesalers are reporting lower sales, with leader Nippon Oil seeing a decline of 220,000 kiloliters, or 1.5%, marking the first dip since fiscal 1999. Cosmo Oil suffered its first decline in seven years, while Japan Energy saw its second in a row.

Overall gasoline sales in the sector, including Idemitsu Kosan and Showa Shell Sekiyu KK, likely fell tens of thousands of kiloliters

to slightly less than 61.4 million kiloliters, based on inventories at the end of fiscal 2005. The downtrend is being driven not only by consumers curbing their purchases because of high prices, but also by an overall shift to more efficient fuel use, as exemplified by the growing popularity of hybrid and other gas-sipping cars.

Gasoline sales had previously fallen just twice since 1950 - in fiscal 1974, during the first oil crisis, and in fiscal 1984, when record heat curtailed leisure travel. Even following the burst of the asset bubble in the 1990s, sales continued to edge up because of the increase in registered cars.

The retail price of regular gasoline in March came to 131 yen (US$1.14) per liter, up 14 yen over the previous year. Gas stations are experiencing a decline in customers who fully fill their tanks.

(Asia Pulse/Nikkei)

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